Question for accountants...
Discussion
Something that has confused me recently.
Some of my work I do self employed, whilst I am employed part time by 2 or 3 other employers.
In the past, some of the employers have taxed me at source, some haven't, but all have provided me with payslips and P60s so it all goes on the tax return and gets sorted out at the end of the year.
This year I was going through my records and realised I didn't have a P60 for one (new) employer, just some payslips (usual fare with employee number, NI number, payroll account, etc. on it).
Emailed them regarding this as I needed a PAYE ref for my tax return as well as the figures to add in. They told me that I had been employed on a casual basis and the figure should be put through my self-employed earnings, hence no P60.
Fine, I have no problem with this - but how was I supposed to know this? What's the difference between being "employed" but not paying any tax on those earnings via PAYE, and being paid on an ad-hoc basis but with similar payslips? Both mean that I get sent payslips with the same info about pay, and no tax being paid, but with the former I get a P60 at the year.
Weird...
Some of my work I do self employed, whilst I am employed part time by 2 or 3 other employers.
In the past, some of the employers have taxed me at source, some haven't, but all have provided me with payslips and P60s so it all goes on the tax return and gets sorted out at the end of the year.
This year I was going through my records and realised I didn't have a P60 for one (new) employer, just some payslips (usual fare with employee number, NI number, payroll account, etc. on it).
Emailed them regarding this as I needed a PAYE ref for my tax return as well as the figures to add in. They told me that I had been employed on a casual basis and the figure should be put through my self-employed earnings, hence no P60.
Fine, I have no problem with this - but how was I supposed to know this? What's the difference between being "employed" but not paying any tax on those earnings via PAYE, and being paid on an ad-hoc basis but with similar payslips? Both mean that I get sent payslips with the same info about pay, and no tax being paid, but with the former I get a P60 at the year.
Weird...
A lot of employers don't have a clue what they're doing in such circumstances.
My daughter used to be self employed, getting work from several companies. Some insisted on putting her through their PAYE schemes. Some deducted tax and NIC, some deducted tax only.
All were wrong.
If an "employer" pays someone gross, who is is not really self employed, that "employer" would have to cough up tax and NI revealed in a random Customs and Revenue inspection.
They are just covering their backs against effectively having to pay the tax over twice.
My daughter used to be self employed, getting work from several companies. Some insisted on putting her through their PAYE schemes. Some deducted tax and NIC, some deducted tax only.
All were wrong.
If an "employer" pays someone gross, who is is not really self employed, that "employer" would have to cough up tax and NI revealed in a random Customs and Revenue inspection.
They are just covering their backs against effectively having to pay the tax over twice.
If you are working for someone on a self-employed basis - presumably legitimately - then the organisation should NOT be issuong you with payslips normally issued to their employees. The implication for them is that the payments they have made to you have been processed through their PAYE system but that no PAYE or NI has been levied on those payments. It would certainly cause them some headaches at the end of the tax year when they produce their Employer End of Year returns as they would need to ensure that all records relating to such "non-employees" needed to be excluded from the amnnual payroll summaries and P35 reports.
In the incident you mention, it does seem strange that you did not query the relationship at the time. What type of arrangements were put in place at the time you accepted the work? Did you have a contract for the assignement? What were the terms of such a contract? Did you not notice what way they were treating the payments to you as shown on the payslips you received?
Regarding self assessment - you definitely wil need to include this income as additional self employed income for the year.
I presume you aren't registered for VAT?
In the incident you mention, it does seem strange that you did not query the relationship at the time. What type of arrangements were put in place at the time you accepted the work? Did you have a contract for the assignement? What were the terms of such a contract? Did you not notice what way they were treating the payments to you as shown on the payslips you received?
Regarding self assessment - you definitely wil need to include this income as additional self employed income for the year.
I presume you aren't registered for VAT?
Eric Mc said:
If you are working for someone on a self-employed basis - presumably legitimately - then the organisation should NOT be issuong you with payslips normally issued to their employees. The implication for them is that the payments they have made to you have been processed through their PAYE system but that no PAYE or NI has been levied on those payments. It would certainly cause them some headaches at the end of the tax year when they produce their Employer End of Year returns as they would need to ensure that all records relating to such "non-employees" needed to be excluded from the amnnual payroll summaries and P35 reports.
In the incident you mention, it does seem strange that you did not query the relationship at the time. What type of arrangements were put in place at the time you accepted the work? Did you have a contract for the assignement? What were the terms of such a contract? Did you not notice what way they were treating the payments to you as shown on the payslips you received?
Regarding self assessment - you definitely wil need to include this income as additional self employed income for the year.
I presume you aren't registered for VAT?
Hi Eric, thanks for your response.In the incident you mention, it does seem strange that you did not query the relationship at the time. What type of arrangements were put in place at the time you accepted the work? Did you have a contract for the assignement? What were the terms of such a contract? Did you not notice what way they were treating the payments to you as shown on the payslips you received?
Regarding self assessment - you definitely wil need to include this income as additional self employed income for the year.
I presume you aren't registered for VAT?
It's official work for a legit employer, but with what looks to me to be standard payslips issued after the 3 separate weeks of work I did for them. There's the usual employee number, payroll number, tax code (NT) etc.
In this exact situation before (payslips received with no tax/NI deducted) with a different employer, I received a P60 at the end of the year with figures for the employed section of my tax return.
Everything I know (albeit not a great deal
) tells me I should be putting this on a separate employed section on my tax return, but their payroll dept. assure me not:Payroll said:
As you are self employed you are paid via a freelancer’s payroll for which we are not required to produce P60s or year end returns for HMRC.
With regards to noticing at the time - in my line of work there's rarely a contract issued, merely a phone booking and a schedule sent out. A bit odd I guess, but that's how it works. When the payslip came through there was nothing to query really - I assumed I would receive a P60 at the end of the year, as has been the case before with other employers. It might be a bit silly, but I assume that they know their job a lot better than I know it I'm putting it down under s-e earnings, but it doesn't feel right
Bizarrely, looking at the payslips, there is a cumulative "taxable pay" box, which is less than the full amount I was paid (it includes pay & travel expenses, but doens't include "fares" and "tour allowance" (which is presumably subsistence as I was staying in Birmingham while working at the time...
So I guess I use that cumulative "taxable pay" figure in my s-e earnings? I'm a bright lad really and good with figures, but a lot of this stuff seems ridiculously complicated, (and I'm not sure that these payroll departments know what they're doing all the time, but I have to trust them!)
Maybe it's time I got an accountant
At the end of the day, it is the taxpayer who has to take responsibility for his own tax affairs and ensuring that the right taxes are paid at the right time. You should have ascertained at the very outset what your status was with this "employer".
What steps have you taken to notify the Revenue that you were self-employed from the beginning of this contract. Self Employed individuals are legally obliged to notify the Revenue that they started a self-employment within three months of the date of commencement.
You should also have been paying Class 2 National Insurance contributions virtually from tyhe start.
Will you be able to submit am on-line Self Assessment tax return within the next three days?
What steps have you taken to notify the Revenue that you were self-employed from the beginning of this contract. Self Employed individuals are legally obliged to notify the Revenue that they started a self-employment within three months of the date of commencement.
You should also have been paying Class 2 National Insurance contributions virtually from tyhe start.
Will you be able to submit am on-line Self Assessment tax return within the next three days?
My self-employment status has been in place for 10 years or so so that's not a problem, and I'm making all my NI contributions.
It's not a problem as I just add it in to my other self employed earnings. I do an awful lot of one offs and it's simply not possible to organise contracts for them all. Most would know less about what was required than I do! I do a lot of cash gigs without paperwork. I declare it all of course, but if I get no paperwork there's not much I can do. If I were to demand paperwork all the time I just wouldn't get booked as I would be more trouble than I was worth
In this case it's a respectable employer with a large (several hundred) staff with a lot of experience in employing extras for small amounts of work. I have to assume that they know what they're about - and the payslips look no difference from the other ones I get from my other employers - just that I didn't get a P60.
I understand what you are saying, but I can't really see any solution. Unfortunately it seems the onus always rests solely on the taxpayer. IMHO it's rather unfair that we are expected to have a limitless knowledge of all the ins and outs of the tax system. Yes, you can employ an accountant (which I have considered many times) - however, half the trouble as far as I am concerned is knowing what to supply to the accountant and in what format to present it to the accountant. By the time I've done that I might as well do the rest.
Anyway, I submitted and paid it tonight. I am sure there are mistakes but it was all done to the best of my knowledge and abilities.
As an aside I was disappointed to see a couple of bad bits of grammar on the online form (the most appalling double negative, and also a practice/practise substitution
I binned my application for the Guildhall School of Music & Drama many years ago when I got to the box marked "Accademic References".
It's not a problem as I just add it in to my other self employed earnings. I do an awful lot of one offs and it's simply not possible to organise contracts for them all. Most would know less about what was required than I do! I do a lot of cash gigs without paperwork. I declare it all of course, but if I get no paperwork there's not much I can do. If I were to demand paperwork all the time I just wouldn't get booked as I would be more trouble than I was worth
In this case it's a respectable employer with a large (several hundred) staff with a lot of experience in employing extras for small amounts of work. I have to assume that they know what they're about - and the payslips look no difference from the other ones I get from my other employers - just that I didn't get a P60.
I understand what you are saying, but I can't really see any solution. Unfortunately it seems the onus always rests solely on the taxpayer. IMHO it's rather unfair that we are expected to have a limitless knowledge of all the ins and outs of the tax system. Yes, you can employ an accountant (which I have considered many times) - however, half the trouble as far as I am concerned is knowing what to supply to the accountant and in what format to present it to the accountant. By the time I've done that I might as well do the rest.
Anyway, I submitted and paid it tonight. I am sure there are mistakes but it was all done to the best of my knowledge and abilities.
As an aside I was disappointed to see a couple of bad bits of grammar on the online form (the most appalling double negative, and also a practice/practise substitution
I binned my application for the Guildhall School of Music & Drama many years ago when I got to the box marked "Accademic References".NiceCupOfTea said:
My self-employment status has been in place for 10 years or so so that's not a problem, and I'm making all my NI contributions.
It's not a problem as I just add it in to my other self employed earnings. I do an awful lot of one offs and it's simply not possible to organise contracts for them all. Most would know less about what was required than I do! I do a lot of cash gigs without paperwork. I declare it all of course, but if I get no paperwork there's not much I can do. If I were to demand paperwork all the time I just wouldn't get booked as I would be more trouble than I was worth
In this case it's a respectable employer with a large (several hundred) staff with a lot of experience in employing extras for small amounts of work. I have to assume that they know what they're about - and the payslips look no difference from the other ones I get from my other employers - just that I didn't get a P60.
I understand what you are saying, but I can't really see any solution. Unfortunately it seems the onus always rests solely on the taxpayer. IMHO it's rather unfair that we are expected to have a limitless knowledge of all the ins and outs of the tax system. Yes, you can employ an accountant (which I have considered many times) - however, half the trouble as far as I am concerned is knowing what to supply to the accountant and in what format to present it to the accountant. By the time I've done that I might as well do the rest.
Anyway, I submitted and paid it tonight. I am sure there are mistakes but it was all done to the best of my knowledge and abilities.
As an aside I was disappointed to see a couple of bad bits of grammar on the online form (the most appalling double negative, and also a practice/practise substitution I binned my application for the Guildhall School of Music & Drama many years ago when I got to the box marked "Accademic References".
I agree that the UK tax system is far too complex and that it was grossly unfair to introduce a "Self Assessdment" system without first undertaking a massive simplification of the whole system first. Unfortunately, this did not happen and we now have a system where the responsibility for knowing and understanding all the complex ins and outs of tax definitions and treatments that pertain to one's own circumstances must be fully understood by the taxpayer.It's not a problem as I just add it in to my other self employed earnings. I do an awful lot of one offs and it's simply not possible to organise contracts for them all. Most would know less about what was required than I do! I do a lot of cash gigs without paperwork. I declare it all of course, but if I get no paperwork there's not much I can do. If I were to demand paperwork all the time I just wouldn't get booked as I would be more trouble than I was worth
In this case it's a respectable employer with a large (several hundred) staff with a lot of experience in employing extras for small amounts of work. I have to assume that they know what they're about - and the payslips look no difference from the other ones I get from my other employers - just that I didn't get a P60.
I understand what you are saying, but I can't really see any solution. Unfortunately it seems the onus always rests solely on the taxpayer. IMHO it's rather unfair that we are expected to have a limitless knowledge of all the ins and outs of the tax system. Yes, you can employ an accountant (which I have considered many times) - however, half the trouble as far as I am concerned is knowing what to supply to the accountant and in what format to present it to the accountant. By the time I've done that I might as well do the rest.
Anyway, I submitted and paid it tonight. I am sure there are mistakes but it was all done to the best of my knowledge and abilities.
As an aside I was disappointed to see a couple of bad bits of grammar on the online form (the most appalling double negative, and also a practice/practise substitution
I binned my application for the Guildhall School of Music & Drama many years ago when I got to the box marked "Accademic References".I have a couple of clients who are in the "entertainment" or "music" business and the nature of their income can vary wildly. What makes matters worse is that the payers often are just as confused as what the right way to treat payments is as is the recipient. Music teaching is a minefield of misunderstandings and mistakes. However, given the right paperwork and certificates, most competent accountants can unscramble the data and put it together in the correct categories with the correct expense and allowance claims offset against the relative income sources.
Edited by Eric Mc on Thursday 29th January 08:42
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